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Since the price has risen for several weeks in a row, Solana has always been a trending altcoin. At the time of writing, Solana was trading at approximately US$207, a surge of 11,400% from less than US$2 in January. According to data from the Cointelegraph market, Solana’s current market capitalization is about 60 billion U.S. dollars, ranking among the top 10 cryptocurrencies and sixth in Dogecoin.
One possible catalyst for this bullish momentum is funding provided by investors led by Andreessen Horowitz and Polychain in June. Solana receives US$314 million, Which will be used to further advance its technology in the field of decentralized finance (DeFi). It is worth noting that the investment took the form of buying SOL tokens instead of traditional stocks.
Another key reason for Solana’s price increase is its announcement The 4th Hackathon It is scheduled to be held on October 8. The target audience of the hackathon is developers whose projects participate in competitions to win cash prizes and seed funding opportunities. This is considered a positive move by Solana because it can help achieve wider adoption of its technology.
Therefore, as Solana progresses, experts have to compare it with similar programmable blockchains in Ethereum. Many people even think that Solana may be the killer of Ethereum, competing with Polkadot (DOT), Avalanche (AVAX) and Binance Smart Chain (BSC).
What is Solana?
Solana is a first-layer blockchain network that can implement smart contracts. Solana was founded in 2017 by Anatoly Yakovenko, a former senior engineer manager of Qualcomm, and claims to be a solution to the Bitcoin scaling problem.Bitcoin) And Ethereum (Ethereum). Two years after its establishment, Solana received an investment of US$20 million. A round of financing Led by Multicoin Capital.
Although Bitcoin is widely accepted as a form of peer-to-peer currency, on the other hand, Ethereum is a platform for almost all peer-to-peer transactions. Solana is in the same alliance with Ethereum with its smart contract capabilities and first-layer infrastructure, but it brings several other propositions.
Ethereum is still the first choice for building decentralized applications (DApps) and deploying smart contracts, but it is undeniable that it is plagued by legacy issues and it tries to improve over time. Due to the lack of scalability, users occasionally face the famously high gas fees. Although its transition to Proof of Stake (PoS) (which is estimated to reduce such fees by applying sharding chains to increase transaction throughput) has been implemented, it is expected that it will not be fully merged into the Ethereum mainnet until late 2021 Year or 2022. This is because although it has been online since December last year, the Beacon chain that will coordinate all shards is still being tested.
On the other hand, Solana has adopted the PoS structure as its consensus mechanism. However, the key innovation lies in its Proof of History (PoH) protocol. Under the PoS system, it may be difficult for the verifier to find the time sequence in the incoming transaction block. The way PoH solves this problem is to establish a historical record to verify the passage of time between two events in an encrypted manner.
Essentially, each Solana validator maintains its own “clock” for verifying the sequence of events and hashing the passage of time. Therefore, it creates a series of hash values, all of which are implemented through a verifiable delay function (VDF).Yakovenko describe It was called “a method of encoding time into data” in 2018.
In other words, Solana can process transactions when they arrive, instead of waiting for a block to be filled, which may be a long process. This makes Solana more scalable, processing more transactions than some other blockchains.
In addition, Solana also introduced a block propagation protocol called Turbine, which decomposes important data into bits, which can then be sent to nodes at a faster speed without taking up too much bandwidth. Solana has also implemented Tower BFT, which is an advanced version of the practical Byzantine Fault Tolerance (pBFT) system in other Delegated Proof of Stake (DPoS) blockchains. Tower BFT also praised PoS because it acts as the gatekeeper of the network.
Ethereum killer?
Although Ethereum is an excellent network with 7,000 nodes and 90,000 validators Comparison of With Solana’s 600 nodes and 1,000 validators, Solana is still known as the “Ethereum Killer”. This is largely due to how its innovation addresses the weaknesses of Ethereum.
Through the above PoH, the validator maintains its own clock, and transaction verification is shortened, because the node will no longer need to invest processing power to verify various timestamps. This improves the speed of processing transactions. Solana claims that it can process up to 60,000 transactions per second, which is comparable to Ethereum and even Bitcoin, Visa and Ripple The combination can be provided.
Not only that, but transaction costs are also significantly reduced. As mentioned earlier, one of the biggest disadvantages of Ethereum users is that gas fees can be unstable and ridiculously high. Users sometimes pay up to $65 to process transactions.Last year, one user even paid You can trade $120 on Uniswap for only $9,500. With Solana, the cost can be from Each transaction is only $0.00025-different from Ethereum’s fees.
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Join the NFT trend
This year, as artists, investors, collectors, traders, and celebrities begin to get involved in this blockchain-based movement, non-fungible tokens (NFTs) are all the rage. Most NFTs are still traded on the Ethereum network. However, Solana is slowly trying to take a share in this emerging market.
A new NFT project called Degenerate Ape Academy became a test of its scalability, as the entire collection of 10,000 apes was sold out in just eight minutes. This caused the SOL price to soar from $44.11 a day ago to $53.70 on August 15.
The Solana NFT market Solanart tracks the sales of the listed NFT collections, indicating that Degenerate Ape Academy NFT is the leading force in Solana NFT sales. The series has accumulated 765,000 SOL tokens, which are worth approximately $122 million at current prices.
In light of this, those who once liked to trade on the Ethereum network may completely change their positions.Former chief marketing officer of dating app Hinge Nathan Ross Tweet On how Solana is more suitable for NFT use cases, because it is faster, cheaper and easier than Ethereum.
Then there is Integration with FTX On September 6, the popular crypto derivatives platform launched its own NFT market.
In the long run, can Ethereum compete with Solana?
The question now is whether Solana can surpass the first two altcoins? Ethereum 2.0 is not expected to be launched until sometime next year, as the second phase of the upgrade schedule will not be until the end of 2021 or early 2022. With the upgrade, supporters believe that transactions on Ethereum may be much cheaper, and may even reach 100,000 times per second or more.
Nevertheless, Solana’s design architecture allows it to keep pace because it is theoretically extended in accordance with Moore’s Law. This means that as time goes by, as computers get faster and faster, Solana will also get faster and faster. Essentially, Solana is oriented towards the future through its expansion capabilities. If it turns out to be the case, will Solana be the culprit for holding an axe against Ethereum?
Cointelegraph’s Market Insights Newsletter shared our understanding of the fundamentals driving the development of the digital asset market. The newsletter delves into the latest data on social media sentiment, on-chain indicators and derivatives.
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